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Running Head: Balanced Scorecard


Balanced Scorecard

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McDonald's Corporation is the world's largest chain of fast-food restaurants, primarily selling cheeseburgers, chicken, French fries, breakfasts and soft drinks. More recently, it also offers salads, fruit, snack wraps, and carrot sticks. The business began in 1940, with a restaurant opened by siblings Dick and Mac McDonald in San Bernardino, California. Their introduction of the "Speedee Service System" in 1948 established the principles of the modern fast-food restaurant. The present corporation dates its founding to the opening of a franchised restaurant by Ray Kroc, in Des Plaines, Illinois on April 15, 1955, the ninth McDonald's restaurant overall. Kroc later purchased the McDonald brothers' equity in the company and led its worldwide expansion. With the successful expansion of McDonald's into many international markets, the company has become a symbol of globalization and the spread of the American way of life. Its prominence has also made it a frequent topic of public debates about obesity, corporate ethics and consumer responsibility.

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McDonald’s has attempted to accommodate increasing customer demand for healthier food. In 1986 McDonald’s began offering nutritional information about the items on its menu. The company also began to offer lighter entrées, such as salads and frozen yogurt. McDonald’s Arch Deluxe, a hamburger marketed to adults, generated disappointing sales when it was introduced in 1996. McDonald’s, for example, is a truly operationally excellent organization, but that doesn’t stop it from continually introducing new menu items. In the Internal Process perspective of the Scorecard, we identify the key processes at which the organization must excel in order to continue adding value for customers. Each of the customer disciplines outlined previously will entail the efficient operation of specific internal processes in order to serve your customers and fulfill your value proposition. Your task in this perspective is to identify those processes and develop the best possible measures with which to track your progress. To satisfy customers, you may have to identify entirely new internal processes rather than focusing your efforts on the incremental improvement of existing activities. Service development and delivery, partnering with the community, and reporting are examples of items that may be represented in this perspective.

If you want to achieve ambitious results for internal processes, customers, and financial stakeholders, where are these gains found? The measures in the Learning and Growth perspective of the Balanced Scorecard are really the enablers of the other three perspectives. In essence, they are the foundation upon which the Balanced Scorecard is built. Once you identify measures and related initiatives in your Customer and Internal Process perspectives, you can be certain of discovering some gaps between your current organizational infrastructure of employee skills, information systems, and organizational climate (e.g., culture) and the level necessary to achieve the results you desire. The measures you design in this perspective will help you close that gap and ensure sustainable performance for the future.

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In the for-profit domain, the measures in this perspective tell us whether our strategy execution—which is detailed through measures chosen in the other perspectives—is leading to improved bottom-line results. McDonald's restaurants are found in 120 countries and territories around the world and serve nearly 54 million customers each day. The company also operates other restaurant brands, such as Piles Café and Boston Market, and has a minority stake in Pret a Manger. The company owned a majority stake in Chipotle Mexican Grill until completing its divestment in October 2006. Until December 2003, it also owned Donatos Pizza. It also has a subsidiary, Redbox, which started in 2003 as 18-foot (5.5 m) wide automated convenience stores, but as of 2005, has focused on DVD rental machines. The McDonald's Corporation's business model is slightly different from that of most other fast-food chains. In addition to ordinary franchise fees, supplies, and percentage of sales, McDonald's also collects rent, partially linked to sales. As a condition of the franchise agreement, the Corporation owns the properties on which most McDonald's franchises are located. The UK business model is different, in that fewer than 30% of restaurants are franchised, with the majority under the ownership of the company. McDonald's trains its franchisees and others at Hamburger University in Oak Brook, Illinois.

The Balanced Scorecard is ideally created through a shared understanding and translation of the organization’s strategy into objectives, measures, targets, and initiatives in each of the four Scorecard perspectives. The translation of vision and strategy forces the executive team to specifically determine what is meant by often vague and nebulous terms contained in vision and strategy statements, for example: “superior service” or “targeted customers.” Through the process of developing the Scorecard, an executive group might determine that “superior service” means responding to inquiries within 24 hours. Thereafter, all employees can focus their energies and day-to-day activities on the crystal-clear goal of response times, rather than wondering about, and debating the definition of, “superior service.” Using the Balanced Scorecard as a framework for translating the strategy, these organizations create a new language of measurement that serves to guide all employees’ actions toward the achievement of the stated direction. McDonald's has become emblematic of globalization, sometimes referred as the "McDonaldization" of society. The Economist magazine uses the "Big Mac Index": the comparison of a Big Mac's cost in various world currencies can be used to informally judge these currencies' purchasing power parity. Because McDonald's is closely identified with American culture and lifestyle, its international business expansion has been termed[by who?] part of Americanization and American cultural imperialism. McDonald's is a perpetual target of various and often conflicting anti-globalization protests worldwide.

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McDonald's has for decades maintained an extensive advertising campaign. In addition to the usual media (television, radio, and newspaper), the company makes significant use of billboards and signage, sponsors sporting events from ranging from Little League to the Olympic Games, and makes coolers of orange drink with their logo available for local events of all kinds. Nonetheless, television has always played a central role in the company's advertising strategy. To date, McDonald's has used 23 different slogans in United States advertising, as well as a few other slogans for select countries and regions. At times, it has run into trouble with its campaigns.


McDonald's fined for employing underage workers", ABC News Online, 2007-04-12. Retrieved on 2007-04-12. 

Merriam-Webster: 'McJob' is here to stay". The Associated Press. November 11, 2003.

"McDonald's fined for employing underage workers", ABC News Online, 2007-04-12.

Mark Abramson and John M. Kamensky (2001) Managing for Results; Rowman & Littlefield Publishers, Inc., September.

Ho, Alfred Tat-Kei (2006) Accounting for the value of performance measurement from the perspective of Midwestern mayors.   Journal of Public Administration Research and Theory; Apr 1.

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